Bank of Canada's Carney ponders degree of rate cut

VANCOUVER (Reuters) - The Bank of Canada has to weigh
strong domestic demand against the spillover effects of the
slowing U.S. economy when deciding how much to cut interest
rates next month, Governor Mark Carney said on Monday.

Carney used his first speech since becoming central bank
chief on February 1 to convey that he is keeping his options
open, suggesting he could potentially reduce the bank's
overnight rate by 50 basis points, as most market players
expect.

Carney's first rate decision on March 4 comes after
back-to-back cuts in December and January of 25 basis points
each, leaving the benchmark rate at 4 percent.

In late January, the bank said more monetary stimulus would
likely be required in the near term and Carney's predecessor,
David Dodge, said the bank preferred "measured" cuts, a term
that Carney has stayed away from.

"The timing and degree of that stimulus will be determined
at future fixed announcement dates, after we have conducted a
thorough analysis of, and applied our judgment to, all
information available to us at that time," Carney said in his
speech, echoing statements made earlier this month in Tokyo.

The Bank of Canada has not cut rates by as much as a
half-percentage point since shortly after the September 11,
2001 attacks in the United States.

Most primary securities dealers surveyed by Reuters expect
the bank to cut rates to 3.50 percent in March.

Carney kept his cards close to his chest, declining to
comment on data released in the past two weeks that have
highlighted the contrast between sagging exports on the one
hand, and a vibrant job market and housing sector on the other.
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